• General

  • RFC: Budget and Compensation for the DAO in 2023

Summary

The DAO is seeking approval for a change to the current compensation framework, which puts more weight on the timely delivery of projects.

Motivation

The compensation framework outlined in OIP-102 has served the DAO well over the past 6 months. However, we believe there is room for improvement.

Due to the overall market sentiment and events that transpired in this year, the OKRs, most of which were market-driven, have not been met. These OKRs were meant to be difficult, but the main issue we found was that the contributors couldn’t directly affect them and thus felt unmotivated when it was clear the market wouldn’t allow us to reach them.

The proposal below outlines how we plan to tackle that problem, as well as ensure timely completion of projects that are in the best interest of Olympus and its community.

Proposal

Bonus

Instead of the current OKR-based bonuses system outlined in OIP-102, allow for a total bonus budget of $1,000,000, to be paid in (g)OHM. This budget would be allocated to projects submitted by the DAO to the community for approval, with the requisite that in 2023 there are at least 3 projects passed by the community and with a maximum bonus per project of $333,333.

All DAO contributors above an average contribution level of 4, active in the DAO over the course of a project and at bonus payout would receive their share of the bonus allocated to that project at the end of the calendar year. The contributor’s bonus share would be weighted based on the average contribution level over the course of a project.

As long as projects are completed within a month of the deadline (deadline + 1 month), the bonus for that project would be paid out in full. After that point, the bonus would start to decay on the following scale.

In addition, for the Council members and Strategos (department leads), given their lower base compensation compared to the role, introduce a potential bonus of $120k per person, to be distributed only in the case of successful and timely (deadline + 3 months) completion of all projects that passed a community vote, again, no less than 3 over the course of 2023.

In the case of completed projects that had their bonus decayed due to not meeting deadlines, but no more than 3m past the deadline, take the weighted average of the bonus percentages to calculate the percentage of $120k that has been earned.

This compensation structure is meant to align the compensation with the responsibilities of the department leads, responsible for their respective departments, and the Council, responsible for overseeing the whole DAO operations.

Projects

Projects that unlock bonuses must be deemed high-impact projects and will be submitted to a community vote via an OIP. Each project proposal must contain a description of the project, definition of what constitutes project completion and a deadline for which the DAO will be held accountable for. Along with the project spec, it must contain the bonus allocated to it for timely completion (100%).

In the extraordinary case that, after the initial project proposal to the community, a project deadline needs to be extended due to unforeseen circumstances or better solutions/improtvements are found, or a project needs to be deprioritized or canceled for justifiable reasons, the contributors would need to request this from the community and provide a detailed explanation in a OIP forum post.

Base Compensation

Up until now, the DAO has worked within the limits outlined in OIP-102 - a $370k monthly base compensation budget, with an allowance for a maximum budget flex of 25%, making the potential maximum budget in any given month $462.5k

Given the proposed introduction of project based bonuses, as well as a more efficient DAO today, we propose that the monthly base compensation be reduced to $280k, with the same allowance for a maximum budget flex of 25%, making the potential maximum budget in any given month $350k This is a 24% reduction in the monthly base compensation budget.

Legal

We predict a legal budget of up to $200k will be needed for 2023. The law firms will be assisting Olympus with the following:

  1. Evaluate potential compliance improvement areas

  2. Identify any proposed risk mitigation steps to be taken by Olympus to comply with applicable law and regulation

  3. Evaluate legal requirements that mandate, and/or prudential risk mitigation considerations

  4. Advise Olympus with respect to the design of any compliance programs, and preparation of appropriate policies, procedures and internal controls integral to such programs, for presentation to the Olympus Community

  5. Prepare summary recommendations(s) describing the proposed risk mitigation steps, and compliance programs to be implemented, for approval by the Olympus Community

Audits

As outlined in OIP-98, the community approved a yearly audit budget of $500,000. This is just an allowance and does not mean the DAO will need to spend the full amount.

Services, Subscriptions, Other Operational Costs

The estimates for subscriptions and other operational costs are based on historical data. Services and service providers (simulations, risk analysis, etc.) are variable and not included in this budget framework. Instead, they would be listed in the quarterly report.

2023 Budget

The budget below is the projected maximum, with maximum spend in all categories (not including potential budget flex of 25%) and full bonuses unlocked.

The DAO currently holds 1,559,510 OHM worth $15,454,744, visible here.

The spend for 2022 can be found in our Q4/2022 report which will be published this week.

In the case that market conditions change and the compensation needs to be adjusted in order for Olympus to stay competitive, the Council would propose an amendment to the community for approval.

The Council also reserves the right, outlined in OIP-91, to approve urgent expenses, including but not limited to security-related expenses, tooling costs, contracted services. These expenses must be detailed in the quarterly report.

If this proposal passes, it would nullify and supersede OIP-102.

Timeline

The goal is for the Snapshot vote to be held by the end of January so that contributors and the community have clarity on the budget, compensation and bonuses in 2023.

Move to OIP?

shadow changed the title to RFC: Budget and Compensation for the DAO in 2023 .

I think there are some fundamental problems with the proposed compensation scheme, especially when it comes to attracting and retaining talented and experienced non-engineering contributors:
1. The general pay levels are low (too low imho) considering all DAO contributors are contractors. In most countries the extra cost of being a contractor vs being employed is 30-80% (corporate tax, income tax, health insurance, pensions etc)
2. In many organisations the senior dev and non-dev compensations tend to align, as good, experienced non-engineers are at least as important for success.
3. Part time or full time levels don't make a lot of sense imo. In a remote first/digital only organisation I think the levels should be set by value provided (set by the stratego and confirmed by the council (grand father principle))
4. I think the proposal is lacking on the incentive structure. The project based bonuses are good to align the org and encourage shipping, but I think current contributors should also have an substantial upside if Olympus really takes off.

    cpt_zeke

    Hi Zeke, as per usual thank you for your input on this proposal in a clear manner!

    On the first point, I disagree firmly. When creating this proposal we looked at several compensation studies done in the industry which clearly showed Olympus was paying above market rate. Many of these studies were on contractor level. In DeFi especially, many companies only employ contractors, Olympus isn't an exception and the salaries you can find are generally for contractors. On top of that, the flexibility of a job at Olympus is hard to find in an employee agreement. If we are very honest with ourselves I think the majority of contributors are not working 8h+ for Olympus.

    Personally and anecdotally, I floated our compensation structure to many defi projects in the space who confirmed my belief that we are compensating in a competitive manner (even without equity). It's hard to share screenshots or personal conversations since this is a sensitive topic, so disregard if you must.

        The proposal seems directionally good imo and an improvement over the previous structure. I have a few reservations:

        1) I still think potentially $1.8million (stratego + project bonuses) in compensation for shipping three projects on-time is a bit high, unless those projects include some estimate of commensurate value accrual to the treasury/dao funds.

        2) What seems to be missing here is talk of inflows vs outflows. I understand we don't need to be net positive on dollar value accrued but it'd make sense to at least go towards that direction. e.g. assuming no reserve bonds, based on some napkin math, the treasury can be expected to bring in (at least) around ~$1million from LP fees and DSR. Are there similar projected revenues that can be included here to see where we stand in terms of net difference, we can perhaps even include inverse bonds in there as "revenue". I don't think the difference will be huge if worked out, but will be great to see.

          Wartull If we are very honest with ourselves I think the majority of contributors are not working 8h+ for Olympus.

          Not working 8h+ a day or week?

              Firstly thanks to all the DAOs contributors, paid and unpaid, who help make Olympus what it is. The work you've delivered as a whole this past 6 months (RBS, OHM bonds etc) has been amazing and is showing sizeable impact on OHM and improving perception of the protocol across defi imo. With regards to those who are compensated and rely on Olympus for income, I appreciate the macro has made delivery to OKRs difficult, and I do think this delivery focused approach for the next year is probably for the best while conditions improve and we're still building out the protocol.

              I agree with much of what is proposed, but fundamentally it concerns me that, "contributors couldn’t directly affect them and thus felt unmotivated when it was clear the market wouldn’t allow us to reach them." I am not going to be so naive as to suggest extrinsic motivation is not important, but the base salaries aren't negligible and Olympus is fundamentally a startup. One that comes with a mission and a vision for how to achieve that. If there are specific individuals who are having trouble feeling consistently motivated then I wonder whether they are brought into that enough? No amount of money can substitute for alignment with a company's mission. I'll vote for "Yes" this, but just want to suggest that the DAO ensure all of y'all are still here for the right reasons. Keep up the amazing work team!

                thomasscovell

                Thank you for recognizing the hard work that has gone into the protocol and the products this past year that has impacted the Olympus Protocol as a whole.

                To address your concerns- Olympus has global contributors. All costs of living are not created equally, and the base comp was not guaranteed as a salary. While the number certainly isn't negligible I'd be remiss if it wasn't made clear:
                -Nobody has signed contracts
                -There's no healthcare
                -No 401k match
                -No vesting tokens
                -No other benefits
                -Contributors carry the full tax burden
                -Variability in comp from month to month

                So while there is the flexibility of working remote, there's also the demand of conforming to the groups meeting times even if inconvenient personally. Additionally most weekends you'll see contributors posting, and I saw far too many active on the holidays. There's no guarantee that you'll have the same comp from month to month, and at some arbitrary time the community could put forth an OIP that would drastically impact your ability to pay the bills. As you said, Olympus is a startup. And adding to that risk, it's a defi startup.

                I think contributors still worked diligently to ship, and I'm sure you can see how it would be frustrating when you've taken on the risk, put in extra effort to try and hit the goals, and it doesn't move the needle. Here's the thing, the projects that we shipped, didn't. I think our OKR's missed the mark twofold, not only were they market based and out of contributors direct impact, they also didn't align with shipping things like RBS that, arguably, improve the protocols health.

                And I think that is the biggest factor of them all. Building products that improve the protocol's ability to support OHM as a currency are not the same products you'd build if you were strictly playing a number go up game.

                In other words, I believe it would be difficult to replace the team we have now for the same costs, and there certainly wouldn't be the cohesion + baseline knowledge that has formed allowing for easier collaboration and production. The contributors who are here now are here because they believe in Olympus. These comp discussions are brutal for the team and I don't think contributors would stick around if it wasn't for the deep rooted desire to help Olympus be successful.

                    hOHMwardbound Thanks for the detail, which I totally understand. I hope I was clear that I'm voting "Yes" for this and think the base compensation + new bonus structure makes sense. My only concern was with regards to extrinsic vs intrinsic motivation.

                    This proposal focuses purely on the former and I wanted to ensure that it wasn't a case of "money will fix everything" and that other avenues for ensuring contributors were enjoying the work, and feeling motivated, were being considered. As a DAO we can't have free snacks in the lunchroom, complimentary massages on friday, or "drinks down the pub" together - i don't know what the online equivalent of these soft benefits is, but I'm just raising it.

                    The phrasing of the RFC made me consider whether vision alignment was an issue, but if as you say, "The contributors who are here now are here because they believe in Olympus." then that question is moot. Good to hear

                    Apologies if I added to the "brutalness" of the conversation, I hope it is clear I support the proposal and applaud the work to date.

                      Thanks for the questions and feedback everyone, will just answer what hasn't been addressed so far.

                      z_33

                      1. The 3 is just a minimum based on the previous year. We actually have a lot of projects within the DAO, but the plan is to submit the highest impact, pillar projects to the community for approval when it comes to bonuses. On the bonuses themselves, they have three purposes. One, they are essentially compensation for a job well done on time. You'll notice that the base comp has been reduced and that part was shifted to bonuses.

                        The second purpose is long-term alignement with the DAO, as bonuses won't be paid out to contributors not actively contributing at the end of the year.

                        Third, is the motivation aspect and I'll use this opportunity to quickly answer @thomasscovell as well. It's not that people were unmotivated to work on Olympus with the market-based OKR system (my bad phrasing), it's more that, at a certain point in the year, the unattainable market-based bonuses were more demotivating than not having them in the first place.

                        The proposed bonus system projects internally and externally what the priorities are and makes sure every contributor knows it. As an individual, you can still love Olympus and be motivated to work on it, but deliver your part of the project a week late which could introduce a much larger delay on the DAO level. Communicating and coordinating work in a strictly remote world is harder than everyone (including us in the past) thinks. Our thoughts are that this kind of bonus system would make that easier and the DAO more efficient because of it.

                      2. To your second point @z_33 , the DAO at the moment has the amount of OHM listen in the proposal as its holdings. Coupled with that, we are restructuring the treasury to add a new lead and have a more coherent strategy and will provide updates to the community as that's done. It's definitely a valid point and something we've been considering as well, but don't think projections now without the new treasury lead would be the best representation.

                      • z_33 replied to this.

                          @"shadow"#p10880 Thanks for clarification. Much appreciated.

                          shadow thanks for your quick and thorough response shadow!

                          PS I ran some numbers, my toilet paper math says just between FraxBP, DSR and LP fees protocol can expect to bring in between 3million and 4million USD of very close to risk free revenue! Numba looking gud!

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